A MARRIED couple acquires a modest suburban house. The couple also establishes a small, but stable family business, which helps them raise their four children. In time, they both die and leave the property and business to their grown-up children.
Your Rights: MIRIAM TOSE MAJOME
They do not leave a will, but leave only the very best intentions and faith that only parents can have in their children. They believe that all will be well because their children will continue to take care of the property and benefit equally from the family assets.
However, it takes the death of parents anywhere to tear a family apart and bring out the worst traits in siblings, who once blissfully shared bathtubs and beds. Before long, the adult children are quibbling like spiteful toddlers over bills and mauling each other over costs related to maintaining the property.
Each child is only interested in their share of the inheritance. Some expect to continue living in the house for free, while others fix the gutters and pay the rates.
Before long, things break down so much that they decide the best way is to sell their parents’ assets, share the proceeds and go their separate ways.
This is not what their parents envisaged, of course, and they would certainly turn in their graves if they knew what mean and unreasonable adults their lovely little children turned out to be.
They had expected them to look after the family assets, which they worked so hard to acquire during their lifetime. They made no specific plans because they thought it was the most logical thing for the children to do for their own benefit.
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However, it rarely ever works that way in the real world. People should really make plans pertaining to how their property and affairs will be handled when they are no longer there to do it themselves.
There are options and as per request we will discuss the various types of arrangements that can be made to protect property rights after death.
A trust
A trust is an arrangement to protect property or certain other interests for the benefit of third parties.
The trust property is administered for the benefit of others or for the achievement of the objectives the trust is set up for.
There are as many different types of trusts as there are reasons for establishing them.
A trust can be set up to provide education and support for the founder’s children or for charitable or developmental objectives.
Some are set up to protect vulnerable members of society or to protect animals or the environment. They range from small ones like family trusts to big trusts that span time and international space such as the Rhodes Trust or Beit Trust.
Setting up a trust
It is advisable to consult a legal practitioner, who is also a qualified notary. A notary is a public officer authorised by the High Court to draft and attest contracts and other documents and to authenticate public acts.
Although anyone can draft a trust document, only lawyers can practice as notaries and appear at the Deeds Office to register the trust.
The notary will advise on what needs to be written in the trust document in order for it to be valid.
The document will set out the rules and terms of reference, including the objectives and appointment and discharge of the trustees.
The trust document is called a Deed of Trust and is registered in the Deeds Registry Office.
The trustees
The trustees are the people who are appointed in terms of the trust deed to manage the trust. They must be competent and must accept the appointment.
The duration and terms of their appointment is specified in the trust document. The trust founder can also be a trustee, but must maintain independence and always act in the best interests of the trust.
Benefits of a trust
Trusts provide for a much tidier and more secure way of administering and safeguarding property for the intended beneficiaries. It is also relatively cheap to register a trust.
Trusts benefit from some tax exemptions and concessions when disposing of trust assets. The trust functions as an independent and autonomous body separate from its founder.
The founder or the beneficiaries cannot make unilateral decisions to dispose of any property that is in the trust. Such decisions are made strictly in terms of the rules set out in the trust document.
Trusts can acquire and dispose of property in their own name because there is a clear separation between trust property and personal property.
The trust can be created during the lifetime of the founder and this is called an inter vivos trust.
A trust can also be established after the founder’s death, wherein, the property devolves into the trust by means of a will. This is called a testamentary trust.
Property means both immovable and movable assets including money. Family trusts are becoming very popular as more people, who own property, increasingly become aware of the importance of protecting their assets for the benefit of all the living and future members of that family.
Termination of a trust
Trust documents provide for how the trust will terminate. In some instances, the trust is wound up when the objective for which the trust was set up is achieved.
For example, if it was for the education of a beneficiary, the trust winds up when the level of education specified has been attained.
The founder, trustees and beneficiaries may also terminate the trust by mutual agreement or by court order if there is a valid reason.
Miriam Tose Majome is a lawyer and a teacher. She can be contacted on [email protected]
